Uncertainty and Unemployment

Why does unemployment continue to increase?  Jerry Bowyer has an explanation:

Jobs aren’t languishing despite the government’s best efforts. They’re languishing because of them.

I think that’s exactly right.  FDR’s policies and, just as importantly, aggressive pursuit of new policies created massive uncertainty during the 1930s that did much to suppress economic activity.

The same holds true of the stock market.  I’ve been sitting on the fence for many months, holding a large amount of cash.  I’m sure lots of other people are doing the same thing.  Cap-and-trade?  Socialized medicine?  New regulations?  More nationalizations?  Too much uncertainty!  If the government simply decided not to do anything for a while, I’d jump back in to the market in a moment.

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